On Thursday, December 22, 2011, Speaker of the House John Boehner reached an agreement with Senate leaders to pass the two-month extension of the payroll tax holiday that he previously opposed. Both the House and Senate passed the bill on Friday December 23, 2011.
Under the agreement, which is nearly identical to the version overwhelmingly passed by the Senate on December 17, employees would continue to pay 4.2% of their first $18,350 of wages toward Social Security for the first two months of 2012. The rate was scheduled to return to 6.2% on January 1, 2012 under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312). Boehner originally opposed the Senate version and was pushing for a year-long extension of the lower employee rate. Under the two month agreement, a family earning $50,000 will save $166.67 in Social Security contributions.
As part of the agreement, the Senate will appoint members to negotiate a full 2012 extension of the lower rates upon their return after the holidays. Also, since most members of Congress have already left Washington for the year, the deal was passed by a procedural move called “unanimous consent”, under which a Bill will pass as long as no member objects to it in person.
In the original House Bill (H.B. 3630), bonus depreciation was scheduled to remain at 100% for 2012. However, Senate Amendment 1465 superseded the entire language of H.B. 3630, effectively removing the 100% bonus depreciation provisions (bonus depreciation is scheduled to return to 50% in 2012 under the Tax relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010). The new agreements reached by the House and Senate on December 22 make no mention of bonus depreciation. However, it may still be addressed in future legislation and be made retroactive to January 1, 2012.
Several other provisions are included in the agreement, including:
- Jobless benefits extended: Emergency federal unemployment benefits, also scheduled to expire on Dec. 31, would be extended through February.
- Medicare physician payments: The bill would prevent a scheduled 27% cut in payments to Medicare physicians for the first two months of 2012.
- Faster push for pipeline: President Obama would have to expedite his decision on whether to allow construction of the 1,700-mile Keystone oil pipeline.
Please contact your Schneider Downs representative for more information. Have a safe and happy holiday season.
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